The euro weakened against the US dollar during Asian trading on Tuesday (November 3, 2026), with the EUR/USD pair falling below the 1.1200 level. This decline followed the euro’s failure to sustain earlier gains near 1.1235—its highest point in a week and a half. The strengthening of the US dollar, combined with investor caution ahead of the US midterm elections, served as the primary factors limiting the European currency's performance.
The US dollar drew support from economic data indicating robust manufacturing activity. The US ISM Manufacturing PMI rose to 55.5 in October, up from 54.5 the previous month, marking ten consecutive months of expansion. This has bolstered market confidence in the resilience of the US economy. Furthermore, with investors assigning a greater than 70% probability to a Federal Reserve (The Fed) interest rate hike in December, the dollar has received an additional boost.
In Europe, growing concerns regarding France’s government debt and political gridlock have weighed on the euro. Uncertainty surrounding the government's ability to control its budget deficit has left investors increasingly cautious about the region's economic outlook. Meanwhile, developments in US-Iran diplomacy—following President Donald Trump’s suggestion that a peace agreement could be within reach—offered a glimmer of hope for global market stability. However, negotiations facilitated by Qatar have yet to yield a major breakthrough, meaning geopolitical risks continue to loom.
Market attention is now focused on the outcome of the US midterm elections, which could trigger volatility in both the dollar and the bond market. Investors are also awaiting several key economic indicators, including the US JOLTS job openings report, preliminary Eurozone inflation data, and the ISM Services PMI. The primary focus will be on the U.S. Non-Farm Payrolls (NFP) report this Friday, which could provide a clearer picture of the labor market's condition and the future direction of the Federal Reserve's interest rate policy.
Newsmaker notes that the pressure on the euro continues to be driven by the strength of the U.S. dollar and concerns regarding France's fiscal situation. As long as expectations for Federal Reserve interest rate hikes remain high, the EUR/USD pair may struggle to regain strength above the 1.1200 level. However, should U.S. labor data show signs of weakness—or if inflationary risks subside due to a decline.